BUSI 435 Week 4 Quiz

  • BUSI 435 Week 4 Quiz

BUSI 435 Quiz 4

1. Slow accounts receivable are a real danger to a small business because they often lead to cash crises.

2. Liquidity ratios (such as the current and the quick ratios) tell whether a small business will be able to meet its short-term obligations as they come due.

3. For Meters, Inc., refer to the following information to answer the question(s) below:

Meters, Inc., reported net sales of $874,916 and a net profit of $74,563 on its most recent income statement. The company's balance sheet shows total assets of $342,742 and total liabilities of $88,367.

4. The income statement is based on the fundamental accounting equation:Assets = Liabilities + Owner's Equity.

5. ________ ratios indicate how efficiently the small firm is being managed.

6. Cash requirements can be determined by dividing cash expenses by ________.

7. The ________ ratio measures the percentage of total assets financed by a small company's creditors compared to its owners.

8. The break-even point is the level of operation at which a business neither earns a profit nor incurs a loss, and lets the business owner know the minimum level of activity required to keep the firm in operation.

9. A cash budget is only as accurate as the ________ forecast from which it is derived.

10. Since even the best sales forecast will be wrong, the small business owner should prepare three forecasts - optimistic, pessimistic, and most likely.

11. Mini-Case 12-3: Rent-A-Nerd Computer Consultants

The owners of Rent-A-Nerd Computer Consultants have prepared the partial cash budget for the upcoming quarter:

12. It is estimated that approximately ________ thousand companies, most of them small, engage in barter exchanges every year.

13. When trying to prevent employee theft, business owners should create a "police state" environment and trust no one.

14. The first line of defense against bad debt losses is to have a financial institution extend loans to credit-seeking customers.

15. When investing surplus cash, the small business owner's key objectives should be on the ________ of the investment.

16. Many banks allow entrepreneurs to schedule their loan payments to fit their company's cash flow cycles.

17. A(n) ________ is when a company raises capital by selling shares of its stock to the general public for the first time.

18. Venture capital companies reject 90 percent of the proposals they receive because they don't meet the firms' investment criteria.

19. While equity capital represents the personal investment of the owner(s) of a business and does not have to be repaid, debt capital is a liability that must be repaid with interest in the future.

20. The first place an entrepreneur should look for startup capital is ________.

21. The Boat and Ski Shop, a small retail boat shop, would most likely rely on which of the following methods to finance its inventory?

22. Rule ________ of the Regulation D exemptions is the most popular.

23. The document outlining the details of the agreement between the entrepreneur and the stock underwriter is called ________.

24. The most common method used by commercial finance companies to provide credit to small businesses is ________.

25. Which of the following is not an asset-based financing technique?


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